Eurelectric has long highlighted the difficulties associated with flow-based allocation of LTTRs, notably the unsustainable increase in collateral requirements linked to the simultaneous auctioning of borders under LTFBA and the risk of low or even zero capacities being allocated on some borders due to the flow competition between borders. While the latter issue has been partly addressed through a minimum ATC benchmark approach, we note that it remains imperfect.
Considering this, Eurelectric welcomes TSOs’ proposal to improve collateral management in the context of long-term flow-based allocation through an improved methodology filtering out Long-Term Transmission Right bids based on clearing prices effectively observed.
We deeply regret that the improved collateral solution will not be available for the go-live of LTFBA in November 2026 and might be delayed beyond 2027. The proof-of-concept (PoC) prepared by N-SIDE on behalf of ENTSO-E clearly shows that the proposed solution will avoid unnecessary restrictions to market participation while preserving auction efficiency, thus avoiding the overly conservative filtering approach of the interim collateral cap.
Eurelectric encourages TSOs and SAP to make every effort to speed up the introduction of this solution, including a clear implementation roadmap and coordination with ACER to address any regulatory uncertainty.
We would welcome further clarity on the practical benefits of the proposed “reserved collateral” functionality. Eurelectric sees merit in exploring the possibility for MPs to use reserved collateral to express priorities between borders. This could facilitate the management of scarce collateral resources across competing bidding strategies.
When it comes to remuneration caps for curtailed LTTRs, Eurelectric reminds that the firmness of LTTRs allocated to MPs is crucial for their hedging effectiveness and for market confidence in general.